By Stefan Pretty
Let’s imagine a scenario where you want to learn how to start a subscription business. Which steps should you take? And which ones are more important than others?
I have seen many businesses start (mostly in the field of subscription box business) and grow, but also a number of ventures that stumbled almost immediately. The good news: There are certain steps that show how to start a subscription business the smart way, and I’m as excited as a kid in a candy-store to share them with you now!
Step #1 – Evaluate the Idea
The first and foremost rule of the subscription business is: convenience comes first. And this principle works both sides. Let’s take the example of subscription boxes (because it’s an exciting business model to run).
For a subscriber (customer), he or she will enjoy the hand-picked products which perfectly fit their needs, all nicely packed and delivered straight to the doorstep.
For the subscription business owner (you), subscription brings the perk of recurring monthly revenue, and the possibility of building long-lasting relationships with your awesome customers.
Whatever your product choice might be, and whichever niche you choose to explore, not every business idea is meant to be a subscription. Start by asking:
- How would my offer make someone’s life easier?
- Even better, does my business idea solve an issue/problem a future subscriber is regularly facing?
- How practical is my imaginary offer?
- This is a big one — a subscription is a long-term system. So, can I devote myself to this idea for months or years to come?
Step #2 – Stand Out from the Crowd
The subscription business model is becoming more and more popular every day. It’s crazy. And trust me, competition is fierce.
From all successful subscriptions I’ve seen (either managed through Subbly or not), the ones that truly stand out are:
- Specific — As an example, they do not only ship healthy food, but a selection of vegan food for busy people (products which are either already prepared, or quick to prepare like Blue Apron for example).
- Relatable — Stories and people sell to people. Not soulless businesses. Remember that.
- Unique and creative.
But please, before we move on, define your perfect customer persona – I CANNOT emphasize how important this is. Start with:
- Who is the person you’ll be serving with your subscription?
- What does he/she like?
- And most importantly, where in their typical purchasing habits lies the gap you could fill with your offer?
Step #3 – Set the Foundation
First, the most painful part — pricing. The wisest way to get started with pricing might surprise you: do your research, check your competitors, figure out your COGS (cost of goods) and estimate the CAC (cost of acquiring a customer) analyses, set the starting price, and — move on to other steps of your setup! Why? Because you’ll be evaluating and changing the prices as your business evolves.
Set it, and move forward. Keep the momentum!
The second aspect on which I’ve seen entrepreneurs waste too many hours is design. Yes, your website does need to look nice, but done is better than perfect. I was super embarrassed with Subbly when it launched, but we got our first paying customers and critical feedback to iterate and improve. Being a perfectionist is fine, unless it slows you down.
Here are other parts of your foundation you should pay attention to:
- Spending/investing — Finding ways to keep spending to a minimum.
- Product procurement — It’s crucial to wisely pick the products, always.
- Creating and maintaining engagement — What should your customer/subscriber feel when they get in touch with your offer? How can you inspire them to want more, and more? Pro tip: Try using your design as a tool for communication and to make your brand as relatable as possible. Get creative. Add a personal touch that’ll make them smile and say “yes!”
- Marketing — An element definitely worth your attention from the beginning and all away through this adventure called subscription business! I’d recommend joining some groups on Facebook, as an example, we have a community where the entrepreneurs share knowledge and it’s super helpful.
Saying that these steps are only a tip of the iceberg would be an understatement… But I hope they inspired you. Seriously… all businesses should consider themselves a value ladder (thanks, Russell Brunson) and have a sales “funnel” in place, but subscription should really be part of any online or offline business.
You can increase your CLTV (customer lifetime value) significantly after making just one extra upsell or sale to your subscription and continuity offering.
So, what are you waiting for?